Michaela Merz

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Italy – VAT deduction on pharmaceutical pay back amounts

Discounts reduced the VAT value of pharmaceutical supplies:
Boehringer Ingelheim Pharma GmbH & Co. KG (C-462/16). Decision available here.

The Taxpayer, a German manufacturer, supplies pharmaceutical products to pharmacies. Retrospective discounts linked to the value of those supplies are paid, not to the pharmacies but to private health insurers which reimburse the insured persons buying the products from the pharmacies. The ECJ held that the Taxpayer can adjust the VAT due on its supplies retrospectively, even though the insurer was not in the original chain of supply. This judgment may be significant, and  businesses may wish to consider protecting their position on adjusting VAT.

One question that may arise from this judgment is whether the fact that the discount in this case is a statutory discount restricts its scope. This might be one way that tax authorities could seek to narrow the scope of a favourable judgment. But this should not discourage suppliers in similar situations from considering protecting their position, as this is very positive and the ‘statutory’ aspect is only one consideration in a complex issue.

Please find information on how Italy will deal with the issue:
Newsalert – IVA e pay back farmaceutico (PwC, final 8 gennaio 2018)



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UAE – No delay to UAE’s VAT launch despite plea, says tax chief

Khaled Al Bustani, director general of the Federal Tax Authority, says VAT will start as planned on Jan 1 2018

The UAE is fully committed to introducing VAT on January 1 despite calls for it to be put back by a senior banker, it was announced on Wednesday. Continue reading

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Swiss public votes NO – Financing of the AHV by increasing the VAT rate

At yesterday’s popular vote, the Swiss voters have refused to raise the VAT rates in order to finance old age pensions.

Since a temporary VAT rate increase from the past runs out, the VAT rates will actually decrease: Continue reading

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Webex – Value Added Tax (VAT) in the Gulf Cooperation Council (GCC)

Are you ready for the introduction of Value Added Tax (VAT)
in the Gulf Cooperation Council (GCC)?

Register now and attend PwC’s webcast
“VAT in the GCC”
on 8 June at 4:00 pm CET

Register HERE


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A Guide to VAT/GST/SUT in the Americas 2017

Consumption taxes play a crucial role in the Americas, regardless of whether they are assessed as Value Added Tax (VAT), Goods and Sales Tax (GST), Sales and Use Tax (SUT) a Customs duty or excise tax. For tax authorities indirect taxes are an efficient and often a fair way of raising revenue and we see indirect tax revenues continue to increase as a proportion of tax take around the world. The rules, rates, interpretations and practices are also constantly changing. Continue reading

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Taiwan – registration obligation for foreign companies providing B2C services expected soon

PwC_fl_30mmh_cUnder current VAT regulations, payment of VAT on provision of services sold by foreign companies to individual Taiwanese customers are the obligation of the individual Taiwanese customer for purchase of services exceeding TWD 3,000 per transaction.

22 of September, a draft amendment of the Business Tax Act concerning sales of cross-border B2C services was approved by the Executive Yuan, where the obligation to report and pay VAT is to be switched to the foreign companies that provide services to individual Taiwanese customers.

The foreign companies would be required to register for VAT purposes in Taiwan and pay VAT. However, many of the key aspects (e.g. VAT registration threshold, definition of a foreign taxpayer etc.) of the new VAT mechanism have not been announced by the tax authority. Moreover, the draft amendments to the Business Tax Act should be further passed by the Legislative Yuan in order for it to be enacted.

For cross-border B2B sales, the current reverse charge mechanism is to remain in place.

Following issue remain open

Uncertainty over definition of foreign taxpayer liable for VAT :
As cross-border digital services are often provided via a platform (e.g. App developer selling Apps through an App platform), whether the App developer or the platform provider would be the taxpayer liable for VAT registration is uncertain. During open discussions with the tax authority, a clear answer was not provided. Therefore, this issue will need to be resolved in the future, possibly through further promulgations by the tax authority or via private tax ruling applications.

VAT registration and exemptions
Under this new mechanism, foreign taxpayers liable for VAT would be required to register in Taiwan. However, as compared with the requirements for domestic companies, it is expected that the registration procedures and requirements for foreign taxpayers would be simplified. Moreover, it is also expected that there would be an exemption threshold, whereby foreign taxpayers with sales under said threshold would be exempt from registration and payment of VAT. However, at what amount the exemption threshold would be set at is currently unclear.

Implications for corporate income tax.
The tax authority has indicated that they have plans to propose corresponding corporate income tax reform for foreign cross-border sellers of services. However, there is currently no official time frame for this as the tax authority has been concentrating its efforts on the new VAT mechanism.
For further details please contact li-li.chou@tw.pwc.com | http://www.pwc.tw.